09 June 2011

On 25 May, Timor-Leste's Council of Ministers approved a Decree-Law to create a national oil company (NOC) named Timor GAP, EP (the name has been changed from PETRONATIL). President Jose Ramos-Horta is deciding whether to promulgate or veto this Decree-Law.

In other countries, state-owned oil companies are often accompanied by anti-democratic or illegal practices, corruption, environmental destruction and other negative consequences. La'o Hamutuk believes that creating an NOC will impact on the future of Timor-Leste and must be done
in a careful, Constitutional manner.

Therefore, we wrote a letter to the President (Tetum original) urging him to make a wise decision which will benefit all of Timor-Leste's people and safeguard our nation's non-renewable resources. Our letter was accompanied by the submission we made to the State Secretariat for Natural Resources last November about an earlier draft of this legislation, although we have since obtained the version approved (Portuguese original) by the Council of Ministers. Our submission raised the following main points:

National oil companies are dangerous, and we should learn from failures as well as successes.

The NOC should be established by Parliamentary law, not decree-law.

The NOC should serve the people of Timor-Leste.

This Decree-Law must be written clearly.

The NOC should follow the rules for state agencies.

The NOC needs to be transparent and accountable.

The NOC should be designed to prevent corruption.

The NOC should not be given more power than it needs.

The NOC’s profits must be paid into the Petroleum Fund, not reinvested in the company.